Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Trupanion Inc (NASDAQ:TRUP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Trupanion Inc (NASDAQ:TRUP) a marvelous investment now? The smart money was reducing their bets on the stock. The number of long hedge fund bets were cut by 1 in recent months. Trupanion Inc (NASDAQ:TRUP) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 18. Our calculations also showed that TRUP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the recent hedge fund action regarding Trupanion Inc (NASDAQ:TRUP).
Do Hedge Funds Think TRUP Is A Good Stock To Buy Now?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRUP over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Nine Ten Partners, managed by Brian Bares, Russell Mollen, and James Bradshaw, holds the number one position in Trupanion Inc (NASDAQ:TRUP). Nine Ten Partners has a $114.1 million position in the stock, comprising 15.8% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $20.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Tom Gayner’s Markel Gayner Asset Management. In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to Trupanion Inc (NASDAQ:TRUP), around 15.79% of its 13F portfolio. Jeneq Management is also relatively very bullish on the stock, earmarking 1.78 percent of its 13F equity portfolio to TRUP.
Judging by the fact that Trupanion Inc (NASDAQ:TRUP) has experienced declining sentiment from hedge fund managers, we can see that there was a specific group of hedge funds who were dropping their full holdings by the end of the first quarter. Interestingly, Josh Tarasoff’s Greenlea Lane Capital sold off the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $48.9 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $1.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to Trupanion Inc (NASDAQ:TRUP). We will take a look at CVB Financial Corp. (NASDAQ:CVBF), Focus Financial Partners Inc. (NASDAQ:FOCS), Verint Systems Inc. (NASDAQ:VRNT), AtriCure Inc. (NASDAQ:ATRC), Gibraltar Industries Inc (NASDAQ:ROCK), Liberty Latin America Ltd. (NASDAQ:LILAK), and Liberty Latin America Ltd. (NASDAQ:LILA). All of these stocks’ market caps are closest to TRUP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVBF | 13 | 40237 | 2 |
| FOCS | 23 | 108921 | 14 |
| VRNT | 26 | 526980 | 6 |
| ATRC | 14 | 196084 | -7 |
| ROCK | 20 | 114842 | 2 |
| LILAK | 29 | 512100 | -1 |
| LILA | 14 | 121187 | -1 |
| Average | 19.9 | 231479 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $209 million in TRUP’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 13 bullish hedge fund positions. Trupanion Inc (NASDAQ:TRUP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRUP is 44.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on TRUP as the stock returned 50.9% since the end of the first quarter (through 7/23) and outperformed the market by an even larger margin.
Follow Trupanion Inc. (NYSE:TRUP)
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Disclosure: None. This article was originally published at Insider Monkey.
